3 Ways to lower Amazon Advertising ACoS

Amazon Advertising revenue topped $10B in 2018, creeping up right behind Facebook and Google, as the third largest ad platform in the US. There would be a major influx of brands investing more into Amazon advertising. Why is this important? More advertisers = more demand = higher CPC. When CPC increases, so does ACoS (Advertising cost of sale). With more ad dollars being allocated to Amazon than ever before, lowering ACoS may seem like a tall task. Here are some ways to make Amazon more profitable.

Negative Keywords - Negative keywords play a key role in keeping ACoS low with Amazon’s advertising platforms. Negative keywords allow you to control what search terms not to serve ads for, which ultimately improves your profitability by focusing ad spend on relevant terms that are more likely to convert and drive sales. Adding negative keywords to your campaigns from the start will help you optimize the campaign faster, as you won’t be wasting money on clicks for irrelevant searches.

Tips – Use keyword planner tools to find negative terms. Create an auto-targeting campaign AND a manual targeting campaign with Broad and/or Phrase match keywords. Once your ads have accumulated enough clicks, use the search term query report. Find and add negative keywords back into campaigns.

Isolate your search terms - In Amazon’s eyes, broad and phrase match keywords are actually “buckets” of search terms often yielding thousands of results for off-topic items. What does this mean? If you target a broad or phrase match keyword, you can only set one bid for that keyword. Amazon then applies that bid to the entire bucket of search terms that match to it. Search term isolation redefines how brands should manage their advertising on Amazon.

Tips - Look at your search terms report frequently and find important keywords. Move these converting search terms into specific campaigns as an Exact Match keyword. Negate the same converting search term from all other campaigns.

Effective Bid Management - Bid management is a lot more complex than most advertisers realize. As we mentioned above, Amazon’s advertising platform only really allows you to control bids for exact match keywords. Phrase and Broad keywords manage a bucket of search terms, which limits your ability to control the CPC. Below are some common scenarios one might encounter when optimizing bids:

If there are low ad sales and high ad spends – Bid down on keywords.

If there is a high conversion rate and low impressions – Increase the bid to capture more traffic and sales

If there are high clicks but low sales and low conversion rate – Check your price and detail page content to make sure they’ve competitive and encouraging conversions.

If there are high impressions but low clicks – Optimize your product image and product title to get better CTRs.

Use below equation to calculate your bids –

Bid = Average Sale Price X Target ACoS (decimal) X Search term conversion Rate (decimal)

I hope these tips to lower your ACoS will help you save money on wasted ad spend and reinvest those funds in your business. Whether you decide to tackle this on your own, with the help of auto-bidding technology, or hire an agency partner, these strategies will help stretch your ad dollars further. Even if your ACoS isn’t skyrocketing yet, Amazon is just getting started with their advertising business and things are about to get crazy, really soon.

Understanding Amazon Advertising Attribution

Amazon sales attribution is when Amazon assigns credit for a sale to a specific campaign. For example, when a user click on one of your ads and buys a product within a certain time period such as 7 or 14 days, the “sale” is attributed to your campaign. There are three different dashboards you can use to advertise on Amazon.

Seller Central – also known as 3P or the dashboard third party seller’s use.

Advertising Console – known as Amazon Marketing Services (AMS) or the dashboard vendors use (1P/first party sellers)

Amazon DSP – formerly, the Amazon Advertising Platform (AAP), run by the Amazon Media group (AMG). Amazon DSP is offered through AMG managed service. It is also available through select agency partners as a self-service tool or directly to top-tier, large budget advertisers.

Amazon tracks attribution differently depending on the platform you’re using.

Seller Central Attribution

Sponsored Product Campaigns – Sales attribution is measured on a 7-day click through attribution window. If a user clicks on an ad, comes back up to 7 days later, and buys one of your products from your brand Amazon will attribute the sale to that campaign. Sales are attributed only to the last ad the user clicked.

Sponsored Brand Ad Campaigns (SBA) – Sales are measured on 14-day click-through window. Sales are attributed only to the last campaign the user clicked. SBA follows what Amazon calls “Brand Halo” sales attribution. This means that if the user clicks on your ad and buys any product with your brand name on it, not just a product featured in your SBA ad, Amazon will attribute the sale to that campaign.

“Brand Halo” gets very tricky. If you are a brand that has listings with different variants of your brand names, Amazon will attribute any sale from any of those brands, including sales made by anyone on Amazon who sells products under your brand.

Amazon Marketing Services – Attribution for the AMS differs from the Seller Central, even though many of the ad types are the same. Across the board, all the units in the AMS work on Amazon Brand Halo attribution whereas in Seller Central, only SB works on Brand Halo. Instead of a 7-day click attribution, AMS works on a 14 day click-through attribution.

Amazon DSP – There are a few different ways that Amazon attributes sales in the DSP platform, Amazon Display advertising platform. First, if you are advertising a product sold on Amazon, there are two types of reporting metrics or values to measure your return on ad spend: Product Sales and Total Sales.

Product Sales only tracks the ASIN you provide to Amazon for conversion tracking purposes. There is no Brand Halo attribution applied here. Amazon currently has to manually approve each list of ASINs you provide to them to verify they are indeed yours. The Product Sales metric is calculated on a 14-day view through attribution window. Viewable Impressions are based on the Media Rating Council Viewability standards. Only 50% of the display ad needs to be in view for one second or more for a sale to be attributed. Also, only 50% of a video ad needs to be in view for two seconds or more for a sale to be attributed. If user saw a DSP ad but then clicked on an SP ad, SP would take the credit for the sale, not DSP.

Total Sales tracks sales on the ASINs provided to Amazon for conversion tracking and all Brand Halo sales from the brand names included in the tracked ASINs list. If a brand gave a list of the ASINs with 10 different brand names, like the licensed brand, then total sales would be skewed because Amazon would attribute any sale from any of those brands in the list, even if you weren’t tracking those ASINs. Total sales are calculated on a 14-day view-through attribution window.

With Amazon DSP, you can also serve ads sending traffic OFF-Amazon. You can track the number of conversions attributed to the ad campaign but not the amount or type. The same 14-day attribution applies. It’s important to understand not just the numbers, but also the attribution behind the numbers so you can get a complete sense of how advertising is really performing to your specific goals.